Medicaid Shifts Funding to Home Care…Will it Work?

What is the least restrictive environment for individuals – elderly or otherwise – who need assistance with personal care, errands, transportation, and other fundamental activities? What is the lowest cost setting for these individuals? Where do most people prefer to be when they reach their golden years? The answer to all three questions is HOME.

Senior woman with caregiver at home.

Due to pressure from the federal government to keep low-income seniors out of nursing homes, Medicaid is shifting its funding from long-term care facilities to home and community-based programs that pay for home care aides who assist with activities of daily living. Sounds like a win-win for all parties, doesn’t it?

So what are the downsides?

Obviously, the motivation behind the movement is money. The federal government wants to lower its payout to the state-funded program in order to prolong its solvency. At the same time, as the category of individuals who are neediest, those over 85, escalates, it becomes necessary for states to look for savings amid ever-tightening budgets. And therein lies the problem.

Based upon the medical condition of the Medicaid recipients, home care providers are dictated a care plan that designates how many hours per week of assistance an individual can receive. Often, even though the reimbursement rate to the provider may be higher, the amount of hours allotted an individual is low compared to the typical care plan of a private pay individual, and finding good caregivers to accept the assignments is a challenge. The fact is, the best caregivers can and do hold out for the best situations, those that yield the most work and occur in the best environments.

As states continue a search for savings, the reimbursement rate itself is in danger of being eroded, forcing providers to find ways to make a profit despite a less-than-desirable rate. What does this usually mean? The caregivers on the lowest end of the pay scale, typically those with less experience and little training, are assigned to provide care to Medicaid recipients. An extreme version of the cost-savings efforts could conceptually create a reimbursement rate low enough to force providers to decline to serve Medicaid patients altogether.

New federal regulations have been proposed to strengthen protections for seniors in these situations, including help with appeals. And therein lies another problem. Both federal and state-mandated programs are already wrought with bureaucracy. As regulations tighten and provider compliance mandates become more complicated, all in the interest of protecting the senior, many providers may simply throw up their hands and walk away. The time associated with being and remaining compliant eats away at profits, so that a well-intended strategy may ultimately have a negative impact on the very individuals for whom the program is intended to benefit.

There is currently no answer to the proposed question, Will it Work? The answers will lie in the analysis that can only occur one or two decades from now.

Did seniors receive excellent care?

Were the results of the care measurable and obvious?

Were the savings needed actually realized?

Was the movement from nursing home to home the win-win it was intended?